That's because whenever Labor talks about a surplus it involves more taxes while increasing/maintaining government spending. Businesses know exactly how Swan plans to get his surplus after spending billions upon billions on other things - through their bottom line.
Interest rates under an Abbott government?
- Thread starter Belbo
- Start date
That's because whenever Labor talks about a surplus it involves more taxes while increasing/maintaining government spending. Businesses know exactly how Swan plans to get his surplus after spending billions upon billions on other things - through their bottom line.
You're not really very good at this question-and-answer thingy, are you Aaron? Talkback-radio style venting just doesn't cut it though as an honest reply.
As to your vent here, business today isn't terrified of extra taxes. It's terrified of around 2.5% of GDP being ripped out of national economic demand by a government slamming on the fiscal breaks. (But I think you know that, and are just playing Coalition cheerleader to impress us.)
But now, did you have an explanation for how Abbott's seemingly profligate economic plans won't feed into interest rate rises?
We will only know this on budget night, but there will be GDP forecasts for the budgetary outlook and a net budgetary position.. It will be interesting to see whether Tim Colebatch's critique will be borne out in reality.
Here's an IMF blueprint to a $100b surplus - would you vote for it?
As Belbo says, don't for a minute think that the big end of town isn't seriously nervous about Abott. An economic illiterate with a tendency towards populism and policy on the fly isn't what would be ordered given a choice.....
Page 2 and the question has been lost...
On topic" Interest rates under Abbot Government?
1. RBA role is to control inflation. So the question should be what will inflation be under Liberal Gov.
2. I think Abbot like all GOV ( lib or labor) will cry poor when he gets in and half the ideas will be shelved. Only Labor under Rudd did not do this as there was obvious cash but the GFC meant it got spent.
In the end it is not the Government action or inaction. For instance:
1. Abolishing Carbon Tax and NBN will save us costs so inflation goes down.
2. but EUR could fix itself and demand rises so costs ( like fuel) go up.
3. One could equal the other and no change.
What I hope is the new Liberal will be strong government and take long terms decisions and allow real debate. Why is it:
We spent millions on Desal plants but nothing on dams which could now be full providing water and green hydro energy.
We spent millions on Solar but nothing on Gas power.
We have carbon tax to fund clean energy like wind, solar, etc but will not consider the lowest form of carbon free energy, Nuclear.
We don't let ourselves burn coal with controls for power to make things due to CO2 but happily sell it to China to burn with no controls to make things, then ship them over here more CO2.
We tax people with Carbon Tax as incentive to save but but then give it back as compensation. Simply more public servants.
The present Fed Goverment has no vision, no talent, no guts. Lets hope the next, lib or labor has some.
Regards
Peter 14.7
On topic" Interest rates under Abbot Government?
1. RBA role is to control inflation. So the question should be what will inflation be under Liberal Gov.
2. I think Abbot like all GOV ( lib or labor) will cry poor when he gets in and half the ideas will be shelved. Only Labor under Rudd did not do this as there was obvious cash but the GFC meant it got spent.
In the end it is not the Government action or inaction. For instance:
1. Abolishing Carbon Tax and NBN will save us costs so inflation goes down.
2. but EUR could fix itself and demand rises so costs ( like fuel) go up.
3. One could equal the other and no change.
What I hope is the new Liberal will be strong government and take long terms decisions and allow real debate. Why is it:
We spent millions on Desal plants but nothing on dams which could now be full providing water and green hydro energy.
We spent millions on Solar but nothing on Gas power.
We have carbon tax to fund clean energy like wind, solar, etc but will not consider the lowest form of carbon free energy, Nuclear.
We don't let ourselves burn coal with controls for power to make things due to CO2 but happily sell it to China to burn with no controls to make things, then ship them over here more CO2.
We tax people with Carbon Tax as incentive to save but but then give it back as compensation. Simply more public servants.
The present Fed Goverment has no vision, no talent, no guts. Lets hope the next, lib or labor has some.
Regards
Peter 14.7
That's implicit in my question about interest rates, Peter, which was framed with leveraged investors in mnd.
Looks like someone has drunk the Liberal Party kool-aid.
Labor are trying to reduce Howard era spending, only the Liberal Party is blocking passage of the legislation in the Senate.
Your simplistic arguments don't hold water. Go back and have a look at Howard's campaign launch in 2004, and count the spending initiatives.
Interest rates concerning investors seem to be decoupling from the central bank rates with banks now making their own decisions more independently. I think there's too many external factors like Europe and the US which will have MUCH more impact on rates than whichever govt has their snouts in the trough.
The Coalition has had experience in balancing budget, inflation and interest rate environment. Firstly, any Coalition in govt will want to have fiscal surplus with cuts to asylum, Carbon Tax and NBN and associated public service support. The fiscal surplus is to allow demand for funds to drop and easier access by the private sector to borrowing. Interest rate under that environment should drop. Drop in Carbon Tax should provide some relief for private consumption, raise competitiveness of local exporters and support employment with weaker currency. Inflation rate will not necessarily be low but consumer sentiment should improve.
I feel based on the Coalition's track record, they will want to manage their budget to support a sustainable economy first. The fiscal dividends in the form of childcare assistance and so on will come 2-3 year later in stages.
Under above environment, rental yield will be maintained as the bulk of employment in the lower speed economy will be supported. Interest rates may not be much lower but manageable. House prices in metropolitan areas will likely rise in an inverse relationship with the exchange rate and its attraction to overseas students.
OK to deal with the off topic bits:
Because new dams are much more expensive than desal plants unless you assume (and someone provides) a really low cost of capital.
And in many locations we are already catching all the available surface water and much of the available groundwater (although IMO there is far more potential for cheaply accessible groundwater than currently utilised).
I'm no defender of solar panels on roofs - it's a very expensive form of renewable energy - large scale wind is much cheaper for example. But on gas: Gas prices are already very high in WA and about to go through the roof (over five to ten years) on the east coast courtesy of the Gladstone developments dragging the domestic price of gas up to international parity. Gas is risky and is no panacea.
The carbon tax will not fund one extra kWh of renewable energy - the renewable energy target does that. The carbon tax is there to encourage lower cost forms of carbon abatement, such as energy efficiency and tree planting, to name just a couple.
On nuclear - because in Australia it would be much more expensive even than renewable energy given the same cost of capital. And because nobody wants it within at least a few hundred km of their backyard.
Because the cost of labour is far cheaper in China and the consumer does not pay more for Australian made when the quality is equivalent.
Because they now have an incentive to save energy where they didn't previously and are no worse off financially overall.
These issues have been debated endlessly in the power and water industries and there are reams of studies published on the topics here. For example on nuclear you can read the Switkowski report and follow the references. Some of us have done this level of research you know... the results are pretty clear!
Anyway, to get back on topic, I reckon the Libs would "just" deliver surpluses and chip away at the debt the way Costello did previously. Doing anything else would be suicide. The promises made to date that Belbo refers to will just be broken with the excuse that "there is less money in the pot than we thought". It's a strategy that has proven itself in NSW recently and infinitely many times before that - I remember an episode of "Yes, Minister" about it twenty years ago.
In doing so interest rates will be able to fall as this will be relative to the massive deficit spending inflicted on us by the current govt. When interest rates are so high there is absolutely no excuse for this level of govt spending "for the good of the economy". Save the balance sheet for when the economy goes off a cliff AND dropping interest rates isn't enough to save it (like most of the rest of the world right now...). This lot have been far too quick to pull the trigger and Australia is all the weaker for it.
Because new dams are much more expensive than desal plants unless you assume (and someone provides) a really low cost of capital.
And in many locations we are already catching all the available surface water and much of the available groundwater (although IMO there is far more potential for cheaply accessible groundwater than currently utilised).
I'm no defender of solar panels on roofs - it's a very expensive form of renewable energy - large scale wind is much cheaper for example. But on gas: Gas prices are already very high in WA and about to go through the roof (over five to ten years) on the east coast courtesy of the Gladstone developments dragging the domestic price of gas up to international parity. Gas is risky and is no panacea.
The carbon tax will not fund one extra kWh of renewable energy - the renewable energy target does that. The carbon tax is there to encourage lower cost forms of carbon abatement, such as energy efficiency and tree planting, to name just a couple.
On nuclear - because in Australia it would be much more expensive even than renewable energy given the same cost of capital. And because nobody wants it within at least a few hundred km of their backyard.
Because the cost of labour is far cheaper in China and the consumer does not pay more for Australian made when the quality is equivalent.
Because they now have an incentive to save energy where they didn't previously and are no worse off financially overall.
These issues have been debated endlessly in the power and water industries and there are reams of studies published on the topics here. For example on nuclear you can read the Switkowski report and follow the references. Some of us have done this level of research you know... the results are pretty clear!
Anyway, to get back on topic, I reckon the Libs would "just" deliver surpluses and chip away at the debt the way Costello did previously. Doing anything else would be suicide. The promises made to date that Belbo refers to will just be broken with the excuse that "there is less money in the pot than we thought". It's a strategy that has proven itself in NSW recently and infinitely many times before that - I remember an episode of "Yes, Minister" about it twenty years ago.
In doing so interest rates will be able to fall as this will be relative to the massive deficit spending inflicted on us by the current govt. When interest rates are so high there is absolutely no excuse for this level of govt spending "for the good of the economy". Save the balance sheet for when the economy goes off a cliff AND dropping interest rates isn't enough to save it (like most of the rest of the world right now...). This lot have been far too quick to pull the trigger and Australia is all the weaker for it.
The Carbon tax is a tax, and is revenue to the government, not a cost. There are associated handouts, but at worst, it is supposed to be revenue neutral.
Abbott's Direct Action plan is conservatively estimated to cost (according to Malcolm Turnbull) $2 billion a year.
I doubt that!
Revenue neutral to the govt but a drag on the rest of the economy and in my opinion is a 'cost' to the rest of the economy and its impact on exports/imports. I doubt the govt cost benefits analysis of the Carbon Tax is robust enough to take account of those effects.
The analysis was undertaken by the Treasury. The same institution that has been used to undertake all government policies including other substantial reforms such as GST. Who else should the government rely upon?
Maybe, but would it drag down govt revenues by $2b a year?
Thats what it would have to do, to be level with the Direct Action plan.
But as Turnbull has publicly made clear, the point about the Direct Action Plan is that it can be abandoned at any moment (i.e. it's just a policy, not a law).
It won't even cost $2b in total because it won't survive a single year, mark my words!
Page 2 and the question has been lost...
On topic" Interest rates under Abbot Government?
1. RBA role is to control inflation. So the question should be what will inflation be under Liberal Gov.
2. I think Abbot like all GOV ( lib or labor) will cry poor when he gets in and half the ideas will be shelved. Only Labor under Rudd did not do this as there was obvious cash but the GFC meant it got spent.
In the end it is not the Government action or inaction. For instance:
1. Abolishing Carbon Tax and NBN will save us costs so inflation goes down.
2. but EUR could fix itself and demand rises so costs ( like fuel) go up.
3. One could equal the other and no change.
What I hope is the new Liberal will be strong government and take long terms decisions and allow real debate. Why is it:
We spent millions on Desal plants but nothing on dams which could now be full providing water and green hydro energy.
We spent millions on Solar but nothing on Gas power.
We have carbon tax to fund clean energy like wind, solar, etc but will not consider the lowest form of carbon free energy, Nuclear.
We don't let ourselves burn coal with controls for power to make things due to CO2 but happily sell it to China to burn with no controls to make things, then ship them over here more CO2.
We tax people with Carbon Tax as incentive to save but but then give it back as compensation. Simply more public servants.
The present Fed Goverment has no vision, no talent, no guts. Lets hope the next, lib or labor has some.
Regards
Peter 14.7
Top post Peter
If he spent so much how come did he have money in the bank at the end of his term.
I dont think Abbott will be the leader come the election. Joe is aming up and Turnbull will have a crack as well.
It's complex, but Howard set the economy up for running a longer term structural deficit. It's like keeping some cash in the bank while taking out a personal loan to buy a car you can't afford. But in Howard's case it was votes through tax cuts.
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